The average annual cost of vehicle ownership continues to rise, in part, because Americans are buying more and more SUVs and CUVs.

New vehicle prices have been rising fast in recent years and are now running closer and closer to $40,000 – but there are other things to consider if you’re looking to buy a new vehicle, and if you factor in things like interest rates and insurance, the typical new vehicle is now more expensive than ever, according to the annual AAA cost-of-car-ownership study.

All told, the average American owner is now spending about $9,282 per year on their vehicle, or $773.50 a month. That’s up from $8,849 a year ago, according to AAA. The study found costs vary widely, depending upon the type of vehicle, with pickups the most expensive and small sedans at the other end of the scale.

A variety of factors have contributed to the spike in ownership costs, including the overall rise in vehicle prices. There’s also the fact that more and more Americans are migrating to pickups, SUVs and other light trucks which tend to be more costly than sedans, coupes and hatchbacks.

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Then there are financing costs, said John Nielsen, AAA’s managing director for Automotive Engineering & Repair. They’ve gone up sharply since the Federal Reserve began raising interest rates, and that’s been compounded by rising vehicle prices and the fact that American motorists have stretched out their loans to hold down monthly costs. AAA found that every 12 months a loan is extended adds another $1,000 in overall finance charges.

AAA’s annual cost-of-ownership estimates vary by vehicle segment – and it shows passenger cars, especially small ones, are the most affordable.

And so, with the average loan now nearly 70 months, according to industry data, loans now average $920 a month, up from $744 a year ago.

“Finance costs accounted for more than 40% of the total increase in average vehicle ownership costs,” Nielsen pointed out, adding that, “AAA found finance charges rose more sharply in the last 12 months than any major expense associated with owning a vehicle.”

As much as finance charges can pile on, depreciation is actually the single biggest factor in determining how much a vehicle costs to own, working out to more than a third, about 36%, of your average annual cost. Thanks to a rare decline in depreciation among small and midsize sedans, depreciation dipped a modest 1.4%, or about $45, this past year. But it still works out to a hefty $3,334 annually that your typical vehicle will lose in value.

Other factors contributing to the surge in ownership costs include:

·       Average fuel prices which rose 5% during the past year, to 11.6 cents per mile;

·       Maintenance and repair costs climbed 8.9% over the past year, to 8.94 cents per mile;

·       Americans paid 1.9% more for licenses, registration fees and taxes, average $753 a year.

The shift to light trucks compounded the increases. Fuel costs, for example, were highest on pickups, at an average 15.67 cents per mile. Energy costs were cheapest for electric vehicles, averaging 3.65 cents per mile.

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In terms of operating costs, which included maintenance and repairs, AAA found EVs the most affordable class of vehicles, at 10.25 cents per mile. Hybrids averaged 13.46 cents, while midsized sedans came in at 18.45 cents. By comparison, midsize SUVs averaged 22.8 cents per mile.

Fuel costs rose more than 11.6 per mile compared with last year, unless you own a full-size pickup then make the number 15.6 cents.

The travel and road service company offered several recommendations, meanwhile, to help motorists hold down their vehicle ownership costs.

“Consider a late-model, gently used vehicle,” a news release suggested. “New cars lose around 20% of their value the moment they leave the lot, so you can save big if you look for a car that’s a year or two old. Your insurance costs could be less, too.”

If you’re in the market for a vehicle, it also helps to know when to go shopping. The best time to score a bargain is late in the month, when sales managers may be anxious to meet quotas. And, if you can wait, hold off to the last half of December when annual quotas need to be met. Other good months are between July and October, according to AAA, as dealers are clearing out old inventory for the new model-year.

One important thing to keep in mind: set a budget before you go shopping and stick with it – but don’t try to load up on features by stretching out the loan to hold down monthly costs.

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For one thing, “Smaller monthly payments may be tempting to potential buyers, but they can add big costs in the long run,” Nielsen said. So, in the long run, you’re better off with a shorter loan and a higher monthly note.

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